VALIKA ART FABRICS LIMITED
ANNUAL REPORT 2004
COMPANY INFORMATION
Board of Directors:
NASIRUDDIN FAKHRUDDIN			Chief Executive
KAMRUDDIN FAKHRUDDIN			Director
KUTBUDDIN FAKHRUDDIN			Director
ALI ASGHAR KAMRUDDIN			Director
SHJRIN KAMRUDDIN			Director
SHIRLEY AMIRUDDIN			Director
JUMANA NASIRUDDIN			Director
Audit Committee:
KUTBUDDIN FAKHRUDDIN			Chairman
SHIRIN KAMRUDDIN			Member
ALI ASGHAR KAMRUDDIN			Member
Company Secretary:
JAFFER ALI KAUKAWALA
Bankers:
STANDARD CHARTERED BANK LIMITED
HABIB BANK LIMITED
Auditor;
AVAIS HYDER ZAMAN RIZWANI			Chartered Accountants
6-S, Block 6,P.E.C.H.S
Off Shahra-e-Faisal
Karachi. Ph:4539319
Shares Department & Registered Office:
4th Floor, Valika Chambers,
Altaf Hussain Road,
Karachi.
Telephone # 2217397-2218193
Bonded Warehouse
A/1-B2, S. I. T. E.,
Manghopir Road,
Karachi.
Telephone # 2575722
Operating Performance
As reported in the last year's report that tough competition had from private Bonded Ware
Houses, despite the company to managed a Revenue Rs.2,848,844/= as compared the Revenue
of Rs.3,349,669/= in the year 2003. The operation result in a - loss before tax of
Rs.( 1,809,748)7= as compared to Profit of Rs. 140,8047= in corresponding period of last year.
This loss was mainly due to written off Bad Debts Rs. 1,155,4837=. Legal charges Rs.l38,300/=
and auditor remuneration increase by Rs.84,500/= During the year re-measurement of
investment made as per requirement of-fAS 37. Gain on investment comes to Rs. 1,368,0097=
after written of following investment.
S. No.     No. of Shares		Name of Company		Value
1             1,000		Indus Bank Limited		133,325
2             5,400		Banker's Equity Limited		553,500
3               400		Synthetic Chemical		4,000
Financial Highlights 1999 - 2004
		2004	2003	2002	2001	2000	1999
Revenue		2,921	3,608	3,619	3,360	3,744	2,602
Operating Expenses		-4,731	-3,467	-3,202	-2,918	-2,749	-2,542
Profit 7 (Loss) before Tax		-1,810	141	417	442	995	60
Profit / (Loss) after Tax		-1,952	85	284	246	622	-1,246
Financial Position .
Paid up Share Capital		1,210	1,210	1,210	1,210	1,210	1,210
Reserve & Un-appropriate Profit		1,805	2,390	2,425	2,292	2,197	1,575
Share Holder Equity		3,015	3,600	3,635	3,502	3,407	2,785
Ratio & Statistics
Current Ratio		2.7	3.83	3.63	1.5	1.69	1.51
Break up value per Share		9.97	11.9	12.02	11.58	11.26	9.21
Earning per Share		-6.45	0.28	0.94	0.81	2.06	-4.12
Dividend per Share		-	0.4	0.5	0.5	-	-
DIRECTOR'S REPORT TO THE SHAREHOLDERS
Your Directors are pleased to place before you 50th Annual Report with financial statements,
duly audited, for the financial year ended June 30, 2004.
Management of Company in order to survive switch its business to "warehousing" and since
then the Company has survived by generate income through warehousing business to meet its'
Basic Expenses, but now due to recent changes in listing regulations, Corporate Governance
and Compliance issue including the registration and placement of shares of Companies with
the Central Depositary Company (The CDC) which puts additional cost to the Company, to
fulfill the said requirements of the law, the financial burden is increased considerably.
Currently Company hold a small number of staff, who are in charge of managing secretarial
and other middle level managerial work. Further, the total Capital of the Company is in a quiet
small of Rs. 1,2 10,0007-  divided into 302,500 shares having 4,943 shareholders out of which
4,694 shares possessed in odd lots.
Keeping in view above said difficulties Board of Directors of the company decided to
voluntary de-list its share and buy-back its shares from the General Public, in this connection
an application has already been submitted to Securities & Exchange Commission of Pakistan
on 28-04-2004, which was further processed and forwarded to Karachi Stock Exchange
(Guarantee) Limited. Presently the Company is under process of obtain approval for voluntary
de-listing and buy-back of shares.
Financial Result
Financial Result of the company for the year ended June 30, 2004 are summarized as urtder:-
				2004	2003
				RUPEES	RUPEES
Revenue				2,848,844	3,349,669
Gross Profit				2,418,258	2,767,094
(Loss)/Profit before Taxation				-1,809,748	140,804
Provision for Taxation				-142,442	-55,370
(Loss)/Profit after Taxation				-1,952,190	85,434
Extraordinary Item				1,368,009	-
On-appropriated Profit Brought Forward				133,420	168,986
Available for appropriation				-450,761	254,420
Proposed Dividend Nil (2003: 10%)				-	-121,000
Transfer from General Reserve & Machinery Reserve				685,000	-
Un-appropriate Profit Carried Forward				234,239	133,420
Earning per Share				-6.454	0.282
STATEMENT OF COMPLIANCE WITH
THE CODE OF CORPORATE GOVERNANCE
This statement is being presented to comply with the Code of Corporate Governance contained
in Listing Regulation No. 37 of the Karachi Stock Exchange for the purpose of establishing a
framework of good governance, whereby a listed company is managed in compliance with the
best practices of corporate governance.
The Company has applied the principles contained in the code in the
following manner:
1.      The Company encourages representation of independent non-executive directors and
directors representing minority interests on its Board of Directors. At present the Board
includes six non-executive directors and no director representing minority shareholders.
2.      The directors have confirmed that none of them is serving as a director in more than ten
listed companies, including this Company.
3.      All the resident Directors of the Company are registered as tax payers and none of them
has defaulted in payment of any loan to a banking company, a DPI or an NBFI or, being
a member of a Stock Exchange, has been declared as a defaulter by that Stock Exchange.
4.      No casual vacancy in the elected directors occurred during the year.
5.      The Company has prepared a "Statement of Ethics and Business Practices", which has
been signed by the directors and employees of the Company.
6.      The Board has developed a vision and mission statement, overall corporate strategy and
significant policies of the Company. A complete record of particulars of significant
policies alongwith the dates on which they were approved and amended has been
maintained.
7.      All the powers of BOD were presided over the Chairman and, in absences, by directors
elected by BOD for this purpose and BOD met at least once in every quarter. Written
notices of the BOD meeting, alongwith the agenda were circulated at least seven days
before the meeting. The minutes of the meeting were appropriately recorded and
circulated.
8.      All the powers of the Board have been duly exercised and decisions on material
transactions, including appointment and determination of remuneration and terms and
conditions of employment of CEO and other executive directors, have been maintained.
9.      No new appointments of CFO/Company Secretary or Head of Internal Audit have been
made during the year.
REVIEW REPORT TO THE SHARE HOLDERS ON STATEMENT OF COMPLIANCE
WITH BEST PRACTICES OF CODE OF CORPORATE GOVERNANCE
We have reviewed the Statement of Compliance with the best practices contained in the Code
of Corporate Governance prepared by the Board of Directors of Valika Art Fabrics Limited
to comply with the Listing Regulation No.37 of the Karachi Stock Exchange (Guarantee)
Limited where the company is listed.
The responsibility for compliance with the Code of Corporate Governance is that of the Board
of Directors of the Company. Our responsibility is to review, to the extent where such
compliance can be objectively verified, whether the Statement of Compliance reflects the
status of the Company's compliance with the provisions of the Code of Corporate Governance
and report if it does not. A review is limited primarily to inquiries of the Company personnel
and review of various documents prepared by the Company to comply with the Code.
As part of our audit of financial statements we are required to obtain an understanding of the
accounting and internal control systems sufficient to plan the audit and develop an effective
audit approach. We have not carried out any special review of the. internal control system to
enable us to express an opinion as to whether the Board's statement on internal control covers
all controls and the effectiveness of such internal controls.
The Company has applied for voluntary de-listing of shares from Karachi Stock Exchange
(KSE), under listing regulation 32-A of KSE. The case of the company is under consideration
for approval by the committee of Board of Directors of KSE.
The Company's has not defined it's policies regarding the followings:
i)         Risk management
ii)        Human resources management including preparation of a succession plan
iii)       Procurement of goods and services
iv)        Marketing
v)         Determination of terms of credit and discount to customers
vi)        Transaction or contracts with the associates companies and related parties
Based on our review, except for the matter referred in above para, nothing has come to our
attention which causes us to believe that the Statement of Compliance does not appropriately
reflect the Company's compliance, in all material respects, with the best practices contained in
the Code of Corporate Governance.
The BOD is in the process of arranging orientation courses for its directors to further
apprise them of their duties and responsibilities.
The directors report for this year has been prepared in compliance with the requirements
of Code of Corporate Governance and fully describes the salient matters required to be
disclosed.
The financial statements of the Company were duly endorsed by the CEO and the CFO
before the approval of BOD.
The directors', CEO and executive do not hold any interest in the shares of the Company
other than that disclosed in the pattern of shareholding.
The company has complied with all the corporate and financial reporting requirements of
the Code, except for the matters referred by the auditor's in their review report.
The BOD has formed an audit committee. It comprises three members, all of whom two
are Non-Executive Directors.
The meetings of the audit committee were held at least once every quarter prior to
approval of interim and final results of the Company and as required by the Code. The
terms of reference of the committee have been formed and advised to the committee for
compliance.
There exists an effective internal audit function within the Company.
The statutory auditors or the persons associated with them have not been appointed to
provide other services except in accordance with the listing regulations and the auditors
have confirmed that they have observed IF AC guidelines in this regard.
The statutory auditors of the company have confirmed that they have been given a
satisfactory rating under the quality control review programme of the Institute of
Chartered Accountants of Pakistan. Further they have confirmed that they or any of the
partner of the firm, their spouses and minors children do not hold shares of the company
and that the firm and all its partners are in compliance with IFAC guidelines on code of
ethics as adopted by ICAP.
We confirm that all other material principles contained in the Code have been complied
with.
In our opinion and to the best of our information and according the explanations given to
us the balance sheet, profit and loss account, cash flow statement, statement of changes
in equity together with the notes forming part thereof confirm with approved accounting
standards as applicable in Pakistan, and give the information required by the Companies
Ordinance, 1984, in the manner so required and respectively, do give a true and fair view
of state of company's affairs as at June 30, 2004 and the loss, its cash flow and changes
in equity for the year then ended; and
In our opinion Zakat was deductible at source under the Zakat and Ushr Ordinance, 1980
(XVIII of 1980) was deducted by the company and deposited in the Central Zakat Fund
established under Section 7 of the Ordinance.
Without qualifying our opinion, we draw attention to note no.2.8 (a), due to which, the
company has not carried out the actuarial valuation for employee's benefits as required
by International Accounting Standards 19, 'Employees Benefits'.
The last Financial Statements of the Company were audited by another firm of chartered
accountants.
AUDITORS' REPORT TO THE MEMBERS
We  have  audited  the  annexed  balance  sheet  of Valika  Art  Fabrics  Limited  as  at
June 30, 2004 and related profit and loss account, cash flow statement, statement of changes in
equity together with the notes forming part thereof, for the year then ended and we state that
we have obtained all the information and explanations which, to the best of our knowledge and
belief, were necessary for the purposes of our audit.
It is the responsibility of the company's management to establish and maintain a system of
internal control and prepare and present the above said statements in conformity with approved
accounting   standards   and   the   requirements   of  the  Companies  Ordinance,   1984.   Our
responsibility is to express an opinion on these statements based on our audit.
We conducted our audit in accordance with the auditing standards as applicable in Pakistan.
These standards require that we plan and perform the audit to obtain reasonable assurance
about whether the statements are free of any material misstatement. An audit includes
examining on test basis, evidence supporting the amounts and disclosure in the above said
statements. An audit also includes assessing the accounting policies and significant estimates
made by management, as well as, evaluating the overall presentation of the above said
statements. We believe that our audit provides a reasonable basis for our opinion and after due
verification, we report that:
(a)     In our opinion proper books of accounts have been kept by the company as required by
the Companies Ordinance, 1984;
(b)     In our opinion:
(i)       The balance sheet and profit and loss account together with the notes thereon have
been drawn up in conformity with the Companies Ordinance, 1984 and are in
agreement with  the books of account and are further in accordance with
accounting policies being consistently applied except for the changes as sated in
note 2.3 with which we concur.
(ii)      The expenditure incurred during the period was for the purpose of the company's
business; and
(iii)     The business conducted, investments made and the expenditure incurred during
the year were in accordance with the objects of the Company;
PROFIT & LOSS ACCOUNT
For The Year Ended June 30, 2004
			NOTE	2004	2003
				RUPEES	RUPEES
Revenue			17	2,848,844	3,349,669
Cost of Services			18	-430,586	(582-,575)
Gross Profit				2,418,258	2,767,094
Other Income			19	72,075	259,134
Administrative Expenses			20	-4,214,965	-2,786,686
(Loss)/Profit before Operations				-1,724,632	239,542
Financial Charges			21	-85,116	-98,738
(Loss)/Profit before Taxation				-1,809,748	140,804
Taxation			22	-142,442	-55,370
(LossyProfit after Taxation				(1,952,190).	85,434
Extraordinary Items			23	1,368,009
				-584,181	85,434
Accumulated Profit Brought Forward				133,420	168,986
Dividend Nil (2003: Cash 10%)				-	-121,000
Transfer from Reserves
- General Reserve				285,000
- Machinery Reserve				400,000	-
Accumulated Profit Carried Forward				234,239	133,420
Basic Earning Per Share			24	-6.454	0.282
BALANCE SHEET
For The Year Ended June 30, 2004
			NOTE	2004	2003
				RUPEES	RUPEES
AUTHORISED SHARE CAPITAL
302,500 Ordinary Shares of Rs.4/- each				1,210,000	1,210,000
SHARES AND RESERVE
Issued, Subscribed and Paid-up Capital
302,500 Ordinary Shares of Rs.4/-each			3	1,210,000	1,210,000
Reserves			4	1,571,167	2,256,167
				2,781,167	3,466,167
Accumulated Profit				234,239	133,420
				3,015,406	3,599,587
LIABILITY AGAINST ASSETS
SUBJECT TO FINANCE LEASE			5	454,448	754,196
• DEFERRED LIABILITIES			6	165,330	61,001
CURRENT LIABILITIES
Current Maturity of Assets Subject to Finance Lease				299,748	253,534
Accrued Expenses			7	445,022	243,986
Other Liabilities			8	22,304	22,304